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The 81-year-old Nobel peace laureate, who rose to fame in the 1980s as a vocal opponent of South Africa's white-minority apartheid regime, will be presented with the award at a ceremony in London on May 21.
The Templeton Prize, one of the world's largest annual awards, is given each year to a living person who has made "an exceptional contribution to affirming life's spiritual dimension".
Last year's winner was the Dalai Lama, Tibet's spiritual leader, who gave the money to charity.
Tutu thanked "all the wonderful people who accepted me as their leader at home" for the prize, which is administered by the US-based Templeton Foundation.
"When you are in a crowd and you stand out from the crowd it's usually because you are being carried on the shoulders of others," he said.
The Templeton Foundation hailed Tutu's "deep faith and commitment to prayer and worship".
The prize was set up in 1972 by the late investor and philanthropist John Templeton. Its first winner, in 1973, was Mother Teresa.
Tutu spoke out vigorously against apartheid during the years when Nelson Mandela was in prison. He won the 1984 Nobel Peace Prize for his work, which he said has always been motivated by religion.
When Mandela became president he chose Tutu to chair South Africa's Truth and Reconciliation Commission, which investigated crimes committed by all sides during apartheid.
Tutu has since given advice to communities elsewhere seeking reconciliation in the wake of conflict, including Northern Ireland and the Solomon Islands.
Cape Town's St George's Cathedral, where Tutu served as archbishop from 1986 to 1996, will host its own celebration of the prize on April 11.